Legal Representation in a Sale of Business Transaction
What to expect from your attorney
- Trust and communication
- Knowledge and experience
- Appreciation of urgency and timetable of deal
- Skill in the art of “creative compromise”
Attorney’s role in selling your company
- Assistance in deal structuring
- Negotiating
- Documenting; and
- Closing the deal.
Stages in the legal process
- Letter of Intent
- The Definitive Purchase Agreement
- Satisfaction of Conditions Precedent to Closing
- Closing
The letter of intent
- What is it
- Why is it important to Seller
The definitive purchase agreement
- Which attorney drafts it and why
- Representation and warranties, covenants, conditions and indemnification: The definitive agreement as a risk-shifting device.
How the attorney can assist in keeping some of the risks on the buyer
- Assistance with disclosure schedules
- Qualifications and limitations on representations and warranties
- Limitations on buyer’s come-back rights: baskets, ceilings and cut-offs on claims
- Blunting requests for set-offs and escrows
The seller’s revenge:security for the deferred purchase price
- Cash is king
- Security devices abound
Examples of conditions to closing
- Termination of unwanted distributors
- Consent of third parties to contracts
- Employment agreements with key employees
- Shareholder consents
- Compliance with environmental laws (ISRA)
- Pension issues
- Legal opinions
The closing
- The best closing is a short closing
- Postscript